Currency mandated by public authority to be universally accepted for clearing financial obligations is known as ?
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Answer: C. legal tender
Explanation
Legal tender is officially designated by government decree for settling all financial debts. Public authority mandates that creditors must accept this specific currency for clearing monetary obligations. This official status ensures widespread confidence and usability throughout the domestic national economy. Fiat money serves as currency without intrinsic value that is established as money by government decree. Central banks issue legal tender to facilitate daily transactions and maintain monetary system stability. Historically, currency transitioned from commodity-backed standards to widely accepted government-regulated fiat systems.
Businesses cannot legally refuse government-approved tender when it is offered to clear financial debts. Stability in legal tender protects citizens from extreme inflation and severe purchasing power erosion. International trade relies on convertible currencies that function similarly within global financial markets. Option A refers to primitive exchange systems involving direct trade of goods without currency. Option B describes the general worth or purchasing power of money rather than its legal status. Option D describes money possessing intrinsic value derived from the physical commodity itself.
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